We had been following McDonald’s (MCD) very closely because of the March 2018 lows but bullish because of overdue 2014. We added it to our StockWaves Coverage List in early May 2018 after a preliminary “i-ii” began a bigger fifth wave focused on 190-195 on time. The pattern on MCD morphed into a “Diagonal” but has endured to fill out well as predicted and persisted in keeping aid tiers cited for even further extension. As it comes into the last viable “squiggles” of a topping sample, we notion it might be a good time to look at it and several of its speedy food-eating place friends.
As discussed in the video above, MCD is nearing the cease of an Ending Diagonal pattern off the 2018 low. This completes the 5th wave of a bigger degree 1/3 wave. Elliott Wave teaches us that the preliminary dropout of an Ending Diagonal may be pretty intense. The bigger fourth wave will frequently target the location in which the ED originated (i.e., The 2018 lows). That means we’re seeking a corrective decline toward at least the 150s as a three-wave pass and potentially a lot deeper in a bigger Primary wave four well into 2020.
MCD Daily chart showing (5) of P. Three and P.4 projection. We no longer often look at basics. However, when will we favor observing P/S and P/E ratios? Using these charts nearly as oscillators can offer measures of when traders found valuations excessive. At almost 7, MCD is nicely beyond previous tiers for P/S that traders have shied far from inside the beyond. In 1999, rapidly earlier than the Cycle degree wave III top, P/S was almost given to five earlier than MCD slid over 75% into the 2003 low.
It has remained below the four-stage (yellow band), simplest popping over it inside the last Intermediate diploma (5), the wave off 2015 lows for most of this rally. It is exciting to observe that just the flow of as much as a hundred thirty in 2016 became sufficient for all of that (5); however, conserving 110 as an ABC and turning up into 2017 morphed that right into a “1-2” of a mile extra extended (five)th. However, it is not as excessive but still nicely off the bottoming region; MCD’s P/E of almost 25 puts it ahead of many big tech organizations.
The next rapid food call we studied had MCD as a prime investor in its early years. McDonald’s helped Steve Ells grow Chipotle Mexican Grill (CMG) from sixteen restaurants to over 500 between 1998 and 2006. In 2006, CMG IPOed, and MCD divested itself. In the past due 2008, CMG made a new low beneath its IPO price because then it has been a sturdy momentum name and counts a stable Primary degree 5 waves up into the 2015 pinnacle. February 2018 low became close enough to the 38.2% Fibonacci retrace of that pass to remember a big Cycle diploma I-II. The price action is the extra feature of a corrective rally for a large B-wave of a wider Cycle II “flat” correction.
The C wave down of this large Cycle II is probable to re-target the same 243 area that held as the 2018 low or likely go with the flow and even decrease to the hundred and seventy places. The C-wave has to incorporate five sub-waves; however, since the maximum of the rest of the marketplace is seeking out a three-wave flow as Primary wave four, we may want to see comparable on CMG, too, and it would just be counted as the wider II as a complicated “WXY” instead of “ABC.” The Cycle wave I in CMG was a nearly 2000% flow; because of the magic of logarithmic charts, the “ordinary” 138.2% Fibonacci extension for III projected off an ability low ~two hundred is over $13,000/proportion! Stoc,kWaves can follow this corrective retrace very intently as we get near support.
CMG long-term projection
The film Demolition Man with Sylvester Stallone and Wesley Snipes expected the future in 1993, foretelling that Arnold Schwarzenegger could be Governor of California. Taco Bell had received the Franchise Wars in that future dystopian society, so now ALL restaurants have been “Taco Bell”… Even exceptional dining establishments.
Demolition Man Taco Bell Yum! Brands (YUM) is a conglomerate that grew out of PepsiCo’s (PEP) fast food department, which started by acquiring Pizza Hut. Since then, it has received, absorbed, and bought numerous franchises but owns Taco Bell, KFC, Pizza Hut, and WingStreet. I suppose MCD is still properly ahead of Taco Bell in logo recognition. MCD has a larger marketplace cap than YUM, and the opposite shares in our listing mixed with Yum China (YUMC) and almost all of the other eating place stocks besides Starbucks (SBUX)… However, Demolition Man is ready in 2032, so YUM may outplay MCD at the next rally.
The YUM chart of 2016 seems very much like the MCD of 2015. Five waves up, completing an Intermediate (5) lock. But on YUM, that (5) is conducting a Primary wave five off its July 2000 low. If that is to be a Cycle II, the “ordinary” Fibonacci retrace sector extends from 37 down to 18. Still, a clear corrective ABC fade in the direction of 37 would be an awesome setup for a long, however possible, that is most effective in the A wave of a deeper II. A Wave III projected a very long time from the 30 vicinities might target ~1800 close to the turn of the century. Demolition Man might also have been approximately seven decades off; however, a pass may want ALL restaurants to be Taco Bells.
